Dr. Miller, who is in private practice in Yorba Linda, California, represents the American Academy of Dermatology on the AMA-CPT Advisory Committee.

Alexander Miller, MD, addresses important coding and documentation questions each month in Cracking the Code. Dr. Miller, who is in private practice in Yorba Linda, Calif., represents the American Academy of Dermatology on the AMA-CPT Advisory Committee.

A Medicare patient visits you for the second time in the calendar year, this time with complaints of growing, occasionally bleeding facial lesions. You identify scattered keratotic actinic keratoses (AKs) as well as probable basal cell carcinomas located on the cheek and nose. You destroy five AKs with liquid nitrogen and biopsy both suspected basal cell carcinomas. Your office then bills for two biopsies, CPT codes 11100 and 11101, and for the actinic keratoses destruction, CPT code 17000-59 and 17003-59x4.

Will you be reimbursed appropriately for your efforts?

There are several steps that must be considered in order to determine whether any procedures are reimbursable, and if yes, then how coding should be done to generate appropriate recognition of and payment for your work:

Is what is done a covered service or is it excluded from reimbursement?

Are the codes, when paired (billed on the same encounter), all payable?

If the codes are in principle payable, then which code should be the primary code, and which should receive a modifier?

Which modifier(s) should be used? [pagebreak]

Knowing what is a covered service can help avoid the frustration of billing an insurer for a service and receiving a denial of payment. Private insurers vary in their coverage policies. Medicare, however, clearly divulges coverage criteria.

The September 2011 Medicare Learning Network transmittal, titled “Items and Services That Are Not Covered Under the Medicare Program”, specifies that cosmetic surgery, which is “any surgical procedure directed at improving the beneficiary’s appearance,” is not covered. Coverage may be further detailed in a National Coverage Determination (NCD) and in your local Medicare contractor’s Local Coverage Determinations (LCDs). Although dermatology-specific NCDs are few, there is one for actinic keratoses (NCD 250.4), which states that they are covered “without restrictions based on patient or lesion characteristics.” However, the NCD guidelines also allow the local Medicare contractors to independently determine maximum number of treatment visits. Consequently, one should be familiar with any pertinent local contractor’s LCDs, and if none is available, then with the contractor’s coverage and payment patterns.

Some Medicare contractors have generated LCDs specifying treatment frequency coverage limits for actinic keratoses and/or coverage criteria for benign lesion removals. The LCDs are readily accessible on your Medicare contractor’s website. An actinic keratosis LCD will list secondary diagnoses that, when present and billed, exclude AK treatments from the visit frequency limits. In such cases, one would link the 17000-17004 destruction codes with the ICD-9-CM for actinic keratosis as the primary code (702.0) and a second code justifying the visit frequency. This secondary code may, for example, specify immunosuppression or a history of skin cancer, or any other pertinent qualifying diagnosis listed in the LCD. The billing staff needs to know this in order to code properly and for you to be paid. The physician has to know this in order to provide the appropriate supporting medical records and billing information. [pagebreak]

Consider that Medicare expects you to know what services are never covered, which services may have a frequency of visits limitation of coverage, and which are reasonable and necessary. If in doubt about Medicare coverage of a service, or if you suspect that the service may exceed the maximum treatment visits per year limitation, then fill out and have the patient complete and sign an Advanced Beneficiary Notice (ABN), available on the websites of both your Medicare contractor and CMS. Guidance on what is covered and not covered, and specifics about the ABN, appear in the May 2012 MLN article titled, “Advance Beneficiary Notice of Noncoverage”. Significant for everyone’s billing practices is the following quote from the publication: “Medicare expects you to know both current NCDs and LCDs” (bold lettering from the original). When is an ABN not needed? It is when services are known to be covered and when they are known to be statutorily not covered.

There are four different modifiers related to ABN use and/or potential non-coverage of a service by Medicare. These are appended to individual CPT codes billed to Medicare.

GA: Indicates that a given charge may or may not be covered by Medicare, and that an ABN has been obtained and is on file.

GX: Indicates that a service is not covered because it is statutorily excluded from coverage or is not a Medicare benefit but an ABN has been obtained as a voluntary option.

GY: Indicates that the service provided is statutorily excluded from coverage. (Note that in such a case one is not required to submit any bill to Medicare).

GZ: Indicates that a charge is not likely to be covered due to a lack of medical necessity, and no ABN was obtained. (In the case of payment denial due to lack of medical necessity the patient would not be liable for the bill because an ABN was not obtained). [pagebreak]

Now, let’s return to the clinical vignette at the top of this article. As this is only the patient’s second visit in the calendar year, treatment frequency limitations will not apply to actinic keratoses destruction, and CPT codes 17000 and 17003x4 should be covered. As basal cell carcinomas are clinically suspected, biopsies, CPT 11000 and 11101, are done for medically necessary reasons and should also be covered. However, will the use and placement of modifier 59 described at the beginning of this article provide for reimbursement? Find out in next month’s continuation article.

Example 1: A Medicare patient with a raised, dark, stable nevus of several decades’ duration would like it removed because it grows an annoying thick, long, and dark hair. You tell the patient that the mole can be excised, and that it is considered a cosmetic-non-reimbursable lesion. The patient insists that you excise it but also wants you to bill Medicare to prove that it is not covered. You agree, excise the mole, and bill Medicare for the excision.

Answer: Incorrect. As the excision is for enhancement of appearance, it is considered a non-covered, cosmetic procedure. Whambo! Medicare will not pay, with an explanation that the patient is not responsible for payment. You get nothing. What went wrong? The claim should have been submitted with a –GY modifier stipulating that the service is statutorily excluded from Medicare benefits. As the service is never covered, you were not required to obtain a signed ABN form. However, such a form helps to document non-coverage. When an ABN is obtained, the service may be billed with a –GX modifier in addition to the –GY, indicating that a voluntary ABN has been obtained.

Example 2: You excise a Medicare patient’s previously stable but now suddenly tender, red, and bulging epidermoid cyst located on the back. You bill for the excision along with ICD-9 diagnoses 706.2 for the cyst and 682.2 for the abscess.

Answer: Correct. Medicare and, typically, other insurers will cover treatment of an abscessed or inflamed epidermoid cyst. As this is a covered service, no ABN is needed. In the billing sequence, the epidermoid cyst diagnosis should be primary, and the abscess, secondary.

Example 3: A patient with a past history of skin cancers visits your California office for the seventh time in the past 12 months for destruction of actinic keratoses. You freeze eight actinic keratoses and bill Medicare with CPT 17000 and CPT 17003x7 along with an ICD-9 diagnosis code 702.0.

Answer: Incorrect. The Medicare Administrative Contractor for Jurisdiction E, which includes California, Nevada, Hawaii and Pacific Islands, maintains an Actinic Keratosis LCD that specifically limits coverage for AK destruction to six visits per 12-month period. A visit frequency beyond this limit may be justified by coding for any of a variety of qualifying criteria, including immunocompromise, extreme sun damage, prior therapeutic radiation or cancer causing drug exposure, predisposing conditions such as albinism, and personal history of skin cancer. In this example the patient’s treatment would be made eligible for reimbursement by billing with the primary AK ICD-9 diagnosis 702.0 plus a secondary code, V10.83, “personal history of skin cancer.”